For personal use only Freehill Mining Limited (ASX: FHS) The global role of Yerbas Buenas magnetite Investor Stream Webinar Update - April 2020 Peter Hinner – Chief Executive Officer
Important Information and Disclaimer The information contained in this Presentation is of a general nature and does not purport to include or summarise all information that an investor should consider when For personal use only making an investment decision. The Presentation does not contain all the information which would be required in a product disclosure statement, prospectus or other disclosure document prepared in accordance with the requirements of the Corporations Act 2001 (Cth) (Corporations Act This Presentation does not constitute investment or financial product advice, is not a recommendation to acquire New Shares and does not and will not form the basis of any contract or commitment for the acquisition of New Shares. Before making an investment decision, prospective investors should consider the appropriateness of the information (including but not limited to the assumptions, uncertainties and contingencies which may affect future operations of the Company and the values and the impact that different future outcomes may have on the Company) having regard to their own investment objectives, financial situation and needs and should seek legal, accounting and taxation advice appropriate to their jurisdiction. Future performance and forward-looking statements This Presentation contains certain forward-looking statements and comments about future events, including the Company’s expectations about the performance of its businesses, the effect of the funds raised under the Offer on those businesses, and the future performance of the Company. Forward looking statements can generally be identified by the use of forward looking words such as, “expect”, “anticipate”, “likely”, “intend”, “should”, “could”, “may”, “predict”, “plan”, “propose”, “will”, “believe”, “forecast”, “estimate”, “target” and other similar expressions. Indications of, and guidance or outlooks on, future earnings, financial position or performance are also forward-looking statements and include statements in this Presentation regarding the conduct and outcome of the Offer, the use of proceeds, the future performance of the Company and the Company's outstanding debt. In making the forward-looking information or statements contained in this Presentation, assumptions have been made regarding, among other things: Competent Persons Statement The information contained in the report that relates to Mineral Resources, Exploration Targets and Exploration Results is based on information compiled or reviewed by Peter Hinner, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Hinner is a consultant of the company and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ . Mr Hinner consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 2
For personal use only Drone video looking north. The 2019/20 drilling area shown in foreground just prior to drill lines being cut, trial mine and processing plant in mid picture left of centre, three conical intrusives and in background is the start of the mountain range that has El Tofo, Tofo Norte and Dominga projects. El Dorado tenements begin half way up visible side of mountain 3
For personal use only Project Highlights Low capital cost Low operating cost Quick path to production Scaleable production Excellent location Excellent infrastructure Local & unique buyer Already trial mined and produced High quality magnetite of 62% or +68% Fe Existing local offtake agreement Significant Copper potential Maiden JORC resource completed
Extensive concession area For personal use only Concession Area Status Area (Hectares) Yerbas Buenas 100% Ownership through Yerbas Buenas SpA & San Patricio SpA 394 Arenas XI 100% Ownership through San Patricio SpA 80 Eldorado Under negotiation for 100% ownership through San Patricio 750 TOTAL 1224 5
Project location Project located close to all major infrastructure: • 50 mins flying time from Santiago with up to 9 commercial flights per day For personal use only • City of 400,000 people with all modern commercial services • Pan American highway within 2km of project site • 2 major operating ports and a third planned within 18kms of project After grade, location & infrastructure are king Some great resources in the world but they’re ‘stranded assets’ Proximity to a market or buyer Ports, roads, power, water, labour and mining friendly jurisdiction 6
Highlights since listing ✓ Operating trial mining & processing plant For personal use only ✓ Sale of magnetite concentrates to CMP/CAP for +2 years ✓ Phase 1 drilling, trial mine pit area – RC 23 holes – 4300m ✓ Maiden JORC Mineral Resource Estimate for magnetite ✓ Acquisition of 80 Hec block containing extension to magnetite structure ✓ Phase 2 drilling, YB06 structure – Diamond drilling 18 holes – 4800m ✓ HOA to acquire 750 Hec of iron-copper-gold prospective ground Freehill has delivered on all its planned tasks since finishing the trial mining operation CMP, Compania Minera Del Pacifco is the iron ore mining division of CAP 7
What’s the difference between hematite and magnetite? There are several forms of iron ore , including magnetite, hematite, geothite, limonite and siderite however the last three are generally of low economic use. For personal use only Fortescue Hematite mine W.A • Predominantly Hematite Fe 2 O 3 • Typically red looking ores • Usually DSO – direct shipping ore because in-ground concentration can be high – 40-67% Fe Savage River magnetite mine Tasmania • Predominantly Magnetite Fe 3 O 4 • Typically black looking ores • Generally lower in-ground concentrations – 10-40% Fe • Pure magnetite contains up to 70-72% Fe 8
Global Magnetite & Hematite Producers Why magnetite ? Is it a good commodity to be in? For personal use only What are the alternatives? Who are the big producers? 9
Global Magnetite Drivers • China accounts for 81% of Australian iron ore exports • For personal use only Chinese blast furnace capacity being consolidated, smaller uneconomic ones shut • Mills demanding higher grade and quality iron ore feedstocks • structural changes taking place in the Chinese steel industry leading to increased demand for higher-quality iron ore. Creates opportunities for companies looking to export pellet feed. Three distinctly different markets for iron ores: -below 58% Fe; -around 62% Fe; and high-grade -low impurity ore (>65% Fe) Concentrates with a grain size <75 µm are used as pellet feed. Concentrates ranging from 150 µm to 6.3 mm are considered suitable for processing to an agglomerate (sinter) Intermediate grain sizes have various uses, often being blended with other feedstock The premium paid for high-grade concentrates (>65% Fe) has steadily increased over the last decade 10
Global Magnetite Drivers Global iron ore production in 2015 was ~2 Bt of which 28% or 560Mt was magnetite. source CRU For personal use only Australia produced ~27 Mt of magnetite concentrate production in 2017 China, the largest global producer, consumer and importer of iron ore, is in the process of restructuring its steelmaking industry to reduce pollution, cut excess steelmaking capacity and improve efficiency and safety. Operational efficiency in steelmaking requires the use of higher- quality feedstock. Quality highergrade, lower-impurity feedstock produces more steel for each tonne used, with the added benefit of reducing steelmaking costs and emissions. China’s government-led initiative of reducing emissions from low-tech steelmaking practices has led to the escalation of price differentials for quality between high- and low-grade iron ore products. This is resulting in what could be a structural shift in the price gap between high and low-grade iron ore products. China’s shift towards higher-quality feedstock presents an opportunity for suppliers of magnetite products to China’s steelmaking sector 11
Price premiums For personal use only Chart shows illustrates how the selling price of Iron ores varies significantly by differing grades. Higher grade concentrates attract a disproportionately greater premium 12
Types of magnetite sold Magnetites sold primarily by their grade and grain size according to end use. Pellets For personal use only • Lump • Concentrate fines -6.3mm to 0.150mm • Sinter feed or sinter • Pellet feed • Pellets 65% Fe is considered a premium product Pellet feeds are generally +67% Fe Sinter Pellet feed Freehill fines concentrates -6mm 13
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